The Garrison Company Offers Terms of Net 30 Days for Its

question 40

Multiple Choice

The Garrison Company offers terms of net 30 days for its credit sales. It records the revenue from these sales as soon as the sales are made rather than waiting until cash is received from the customers. This is an example of the

• A) realization principle.
• B) matching principle.
• C) conservatism principle.
• D) consistency principle.

---

Definitions:

Retained Earnings

Profits that a company retains for reinvestment in its operations, rather than distributing to shareholders as dividends.

Stock Repurchases

The act of a company buying back its own shares from the marketplace, potentially to increase the value of remaining shares.

IRS

Internal Revenue Service, the U.S. government agency responsible for tax collection and tax law enforcement.

SEC Regulations

The rules and regulations enforced by the Securities and Exchange Commission (SEC) that govern securities and financial markets in the United States.